We recently participated in an e-auction conducted by a reputed bank in telangana and won the bid to buy a residential plot . We paid full amount and received the certificate of sale from the bank. When we went for registration, the sub-registrar (SR) denied to register as the said property is in prohibited property list with 2 cased ‘covered by court stay orders’ and 1 case with chit registrars. Bank official tried to convince SR saying the sale/auction is covered under SARFAESI ACT and it should be registered but SR finally denied registration. Now, the bank wants to take legal action against the SR for NOT registering the property and get court directions to get it registered. Question: Firstly, Can we withdraw/back out and get our money back from the bank as the said property was not registered by the SR and SR gave it in writing the reason for denials. Please let us know the procedure. Secondly, can a bank legally auction a property which is in prohibited properties list maintained by the registration office/govt. Lastly, if the bank using their strong arm get the property registered on our name, would we be subjected to any legal proceedings and can we sell the same property without any issues in future.
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Issue legal notice to bank to refund your money with interest as sub registrar has declined to register the plot on your name as it falls under prohibited list
2) if bank refuses file writ petition in HC to direct bank to refund your money with interest
3) you would not be able to sell property in future
You can issue a legal notice to bank stating that that the bank has failed to register the property for the reasons stated by Registrar hence the title of the bank over the property is defective so you demand the bank to return the sale consideration amount paid by you.
The bank has not confirmed the status of property before bringing it to auction sale, but went ahead with the sale of property when there's already a stay existing against the property, hence the sale can be declared as null and void.
If the bank's title is established then you may not have any problem in this regard in future.
- Under the SARFAESI act, at the time of the auction, the bank has either symbolic possession or physical possession of the property.
- Further, the Jammu and Kashmir and Ladakh High Court ruled that a Bank can auction the property even with encumbrances attached to property under the SARFAESI Act but it is incumbent upon the Bank to disclose the encumbrances and litigations attached to the property to all the persons who want to participate in the same and to the successful bidder.
- Further , Rule 9(9) of the Security Interest (Enforcement) Rules, 2002, states that the authorized officer had to deliver the property to the purchaser free from encumbrances.
- Since , the Registrar has refused to register the title deed in your favour , then the bank is under obligation either to handover the peaceful physical possession with the clear registered deed in your name or to refund the amount on the ground of concealment of the true facts.
- You can send a legal demand notice to the said bank , and if not refunded then file a Writ Petition against the bank for getting the refund of entire amount with interest .
from the facts stated by you it is very clear that the bank did not disclosed about the existing encumbrances on the property and without such disclosure it auctioned the property which is completely illegal
under the SARFAESI Act the bank is mandated to disclose all material facts to the prospective purchasers and if such a disclosure is not made then the sale is illegal
no point having the sale certificate registered when there are encumbrances affecting the property
if you take the title then it is highly likely that in future you may face issues
so my advise would be to seek refund of your money from the bank with interest and if the bank refuses that then you can approach the High Court by filing a writ petition
the bank will take a defense that only the DRT can try the issue, but you have to resist that by saying that in this case there is non-disclosure by the bank about material facts and for seeking any reliefs against such non-disclosure the DRT would not have the jurisdiction but only the High Court
please note that you can approach the HC by filing a writ petition to claim refund of your money only if the bank is a PSU bank
if its a private bank then you may have to file a suit against the private bank for recovering your money
1) Yes, you can withdraw/backout and get your money from bank, Because here totally bank is responsible to give handover of property physical possession and legal transfer of rights documentation.
2) No, Bank has to check all papers before making it available for auction.
3) We need to study the history of particular property details from last 30 years.
When a property is included in prohibited list under order from Court, it cannot be registered till the finalization of disputes pending the Court that too in a manner favorable to bank. There is no such strong arm against order of Court, Sub-Registrar is bound by order of Court. Auction is void as all parties involved were under mistake as to fact of prohibition of Registrar. You can only seek refund to auction amount with interest and penalty. File a civil suit for recovery of auction price with interest in District Court. As you are not a consumer, you cannot approach District Consumer Commission.
Yes, seek to set aside the sale and ask for full refund of the sale price from the bank, on the ground that the bank had deliberately not disclosed the encumbrance to you. Send them a demand notice through a competent lawyer and in case of default, file an application before the DRT concerned for appropriate redress.
yes you can go for full refund against the bank in civil or consumer court along with compensation for harassment and torture
